Sports & Entertainment Marketing II4.02 Acquire information to guide business decision making.

Economic Impact of Sports EventsBenefits from hosting major events cannot be measured

Creates goodwill, pride, and positive media coverage for an area

Have to look at the opportunity cost of hosting an event What are you giving up? What are you getting?

How much money would the area have brought in without the event?

Economic Impact of Sports EventsOne of the greatest benefits from a major sporting event may not be the event itself but the potential it creates for future events

Raises the profile of the cityEnhances reputation encouraging tourism Builds community cohesion Draws more residents & investors https://www.youtube.com/watch?v=kRfYpuCJCZU

Economic Impact of Sports EventsRecent spending on stadiums for top-level professional teams has generated a great deal of attention

Between 2000 and 2009, 31 major league stadiums and arenas opened across urban America at a public cost of approximately $8 BILLION

A few were built to attract new teams, but most replaced existing facilities for incumbent teams

Economic Impact of Sports EventsSome examples…

Portugal spent $732 million to host the Euro 2004 (European Soccer Championship) public money paid for SEVEN new stadiums in a country about the size of Indiana

South Korea & Japan co-hosted the 2002 World Cup South Korea spend $2 billion on 10 new facilities & Japan spent $4.5 billion building 7 new stadiums and renovating 3 others

2004 Summer Olympics in Athens Greek government spent $12.8 billion to host

Beijing games in 2008 Chinese spent over $43 billion

Economic Impact of Sports EventsSome examples…

The average cost of a football or baseball stadium built since 2000 is $528 million

Average cost of a basketball or hockey arena built during this period is $276 million

Public money generally covers about 2/3 of these costs

Economic Impact of Sports EventsThe significant investment by local governments suggests that the economic returns of sports must be quite large

Teams, stadiums, and events are commonly promoted as economic catalysts

https://www.youtube.com/watch?v=025YBECRfE8

Economic Impact of Sports EventsDirect Impact

The first round effect of visitor spending hotels, restaurants, etc. that received the initial amount spent of goods/services in the local economy pays employees in the area

Indirect ImpactRipple effect of additional rounds of recirculation the

initial spectator dollars Induced Impact

Further effect caused by employees of impacted businesses spending some of their salaries and wages in other businesses

Economic Impact of Sports EventsWhat are the basic economic impacts?

Number of spectatorsNumber of attendees (non-spectators)Percentage of spectators and attendees from

outside the “host economy”Duration of the event

Direct Economic Impact A measure of the total amount of additional expenditure within a defined geographic area, which can be directly attributed to staging an event

Based on visitor/organizer spendingAn assessment of the net increase in spending as a result of the event

Which of the following sport/event situations is most likely to have a negative economic impact on a local community?

A. New college football stadium in being built

B. Professional baseball players go on strikeC. A popular music group comes to townD. Golf tournament organizers solicit

volunteers

Which of the following sport/event situations is most likely to have a negative economic impact on a local community?

A. New college football stadium in being built

B. Professional baseball players go on strikeC. A popular music group comes to townD. Golf tournament organizers solicit

volunteers

Why do sport/event organizations maintain sales and accounting records? A. To measure economic impactB. To prepare promotional materialC. To calculate salary informationD. To determine household income

Why do sport/event organizations maintain sales and accounting records? A. To measure economic impactB. To prepare promotional materialC. To calculate salary informationD. To determine household income

Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament:

A. Higher restaurant salesB. Fewer hotel reservationsC. Increased traffic congestionD. Decreased tax revenues

Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament:

A. Higher restaurant salesB. Fewer hotel reservationsC. Increased traffic congestionD. Decreased tax revenues

4.02 Activity Your city wants to build a new venue. It can be a professional sports stadium or a multi-purpose facility. Citizens of your community must pass a bill to levy an 11% tax on hotels and rental cars (hospitality tax) to help pay for the new facility. You are in charge of the promotional campaign for convince voters to pass the extra tax. Your main goals is to influence the vote. How will you convince voters that the new venue is a great idea? How will it be beneficial to the local economy? Troubleshoot potential negative outcomes. Present this however you feel comfortable as long as it is professional!